1The Confederation shall legislate for an occupational pension scheme.
2In doing so, it shall adhere to the following principles:
the occupational pension scheme, together with the Old-age, Survivors’ and Invalidity Insurance, enables the insured person to maintain his or her previous lifestyle in an appropriate manner.
the occupational pension scheme is compulsory for employees; the law may provide for exceptions.
employers shall insure their employees with a pension institution; if required, the Confederation shall make it possible for employees to be insured with a federal pension institution.
self-employed persons may insure themselves on a voluntary basis with a pension institution.
for specific groups of self-employed persons, the Confederation may declare the occupational pension scheme to be compulsory, either in general terms or for individual risks only.
3The occupation pension scheme is funded from the contributions of those insured, whereby employers must pay a minimum of one half of the contributions of their employees.
4Pension schemes must satisfy the minimum requirements under federal law; the Confederation may provide for national measures to resolve particular difficulties.
Art. 113 FC regulates occupational pension provision, also called the second pillar. Together with OASI/DI (first pillar) and private pension provision (third pillar), it forms the Swiss three-pillar system of old-age and survivors' insurance.
Who is affected? All employees must be compulsorily insured under occupational pension provision. This affects approximately 4.7 million employed persons in Switzerland. Self-employed persons may obtain voluntary insurance.
What is regulated? The Confederation must enact laws on occupational pension provision. These laws must observe five principles: First, occupational pension provision together with OASI shall secure the accustomed standard of living. Second, it is compulsory for employees. Third, employers must insure their employees with a pension fund. Fourth, self-employed persons may obtain voluntary insurance. Fifth, the Confederation may introduce compulsory insurance for certain self-employed persons.
Financing: The costs are shared between employers and employees. This parity financing (equal sharing) means that the employer must pay at least half of the contributions. With a monthly contribution of 1000 francs, the employee pays at most 500 francs.
Legal consequences: All pension funds must meet federal minimum requirements. Violations may lead to closure or rehabilitation of the pension institution. Employees are entitled to the legally prescribed minimum benefits.
Practical example: A bank employee with an annual income of 80,000 francs pays approximately 400 francs monthly into the pension fund. Her employer pays at least the same amount. After retirement, she receives a monthly pension which, together with the OASI pension, should amount to approximately 60% of her last salary.
Para. 1 Occupational pension provision was first enshrined in the Federal Constitution in 1972 with Art. 34quater aFC (BBl 1971 II 1609). The constitutional article at that time already established the basic features of today's three-pillar system and gave the Confederation the mandate to enact provisions on occupational pension provision.
Para. 2 During the total revision of the Federal Constitution in 1999, Art. 34quater aFC was transferred to Art. 113 FC with only minor linguistic adjustments (BBl 1997 I 379). The Federal Council message notes that the existing constitutional requirements were to be adopted unchanged in order to ensure the continuity of the proven three-pillar system (BBl 1997 I 379 f.).
Para. 3 The most important substantive innovation compared to Art. 34quater aFC is found in para. 2 lit. e, according to which the Confederation may declare occupational pension provision obligatory for certain groups of self-employed persons. This competence was inserted based on experiences with voluntary insurance and sometimes inadequate pension benefits for self-employed persons (BBl 1997 I 380).
Para. 4 Art. 113 FC forms, together with Art. 111 FC (OASI/DI) and Art. 114 FC (unemployment insurance), the core of the constitutional social insurance system. The three pillars of old-age provision are systematically coordinated: the first pillar (OASI) secures basic needs, the second pillar (occupational pension provision) enables the continuation of the customary standard of living, and the third pillar (self-provision) serves individual supplementation (Cardinaux, BSK BV, Art. 113 Para. 3).
Para. 5 The competence provision in para. 1 belongs systematically to the substantive competences of the Confederation (Art. 54–125 FC). It establishes a comprehensive federal competence with subsequent derogatory effect, whereby cantonal regulations in the area of occupational pension provision are only subsidiarily permissible (→ Art. 49 FC). However, the cantons remain responsible for the occupational pension provision of their own personnel, insofar as federal law does not provide conclusive regulations (BGE 135 I 28 E. 5).
Para. 6 The social objectives in Art. 41 FC supplement the concrete constitutional mandates of Art. 111–114 FC programmatically. While Art. 41 para. 2 FC does not establish subjective rights, the specific requirements in Art. 113 para. 2 FC create binding guidelines for the federal legislator (→ Art. 41 FC).
#3. Elements of the Provision / Content of the Norm
Para. 7Legislative competence (para. 1): The Confederation has not only the authority but the duty to enact provisions on occupational pension provision. This comprehensive competence covers all aspects of the second pillar, from benefit requirements through organization to supervision (Cardinaux, BSK BV, Art. 113 Para. 21).
Para. 8Benefit objective (para. 2 lit. a): Occupational pension provision shall, together with OASI/DI, enable the «continuation of the customary standard of living in an appropriate manner». According to the Federal Council's conception, pension benefits from the first and second pillars should together reach 60% of the last gross salary for middle incomes (Cardinaux, BSK BV, Art. 113 Para. 30). The Federal Supreme Court has clarified that overinsurance through the accumulation of various social insurances is not compatible with the objective of the second pillar (BGE 130 V 369 E. 2.2).
Para. 9Insurance obligation (para. 2 lit. b): The obligation for employees forms the core of occupational pension provision. The concept of employee status in occupational pension provision is identical to that of OASI (Cardinaux, BSK BV, Art. 113 Para. 38). The law may provide exceptions, for example for minor incomes or short employment periods (Riemer/Riemer-Kafka, Recht der beruflichen Vorsorge, § 4 Para. 25 ff.).
Para. 10Implementation through pension institutions (para. 2 lit. c): Employers must insure their employees with a pension institution. This decentralized organization is an essential characteristic of Swiss occupational pension provision (Helbling, Personalvorsorge und BVG, p. 89). The Confederation must subsidiarily provide a federal pension institution (safety fund).
Para. 11Self-employed persons (para. 2 lit. d and e): Self-employed persons may insure themselves voluntarily. The Confederation may introduce an obligation for certain groups, which it has not yet done (Stauffer, Berufliche Vorsorge, Para. 156).
Para. 12Financing (para. 3): Joint financing is constitutionally enshrined. Employers must pay at least half of their employees' contributions. This minimum parity applies to both obligatory and supplementary occupational pension provision (Cardinaux, BSK BV, Art. 113 Para. 57).
Para. 13Minimum requirements (para. 4): All pension institutions must meet federal law minimum requirements. These concern organization, financing, investment regulations and supervision (Schneider/Geiser/Gächter, BVG Handkommentar, Intro Para. 45 ff.).
Para. 14 The Confederation's legislative competence under para. 1 is comprehensive and conclusive. Cantonal provisions are only permissible insofar as federal law leaves room, particularly in the design of public-law pension funds (BGE 135 I 28 E. 5.2).
Para. 15 The principles established in para. 2 are binding on the federal legislator. It has considerable discretion in implementation, but may not circumvent the constitutional requirements (Häfelin/Haller/Keller/Thurnherr, Bundesstaatsrecht, Para. 2194).
Para. 16 The benefit objective under para. 2 lit. a does not establish an individual constitutional claim to a specific pension amount. It is an objective specification for the legislator, which is concretized in the BVG through the determination of the insured earnings and conversion rates (Müller/Schefer, Grundrechte, p. 894).
Para. 17 The financing provision in para. 3 has immediate effect. Regulatory provisions that provide for a lower employer contribution are void (Brühwiler, Betriebliche Personalvorsorge, p. 234).
Para. 18Scope of the obligation: It is disputed to what extent the legislator is authorized to provide exceptions from the insurance obligation. While Riemer/Riemer-Kafka (Recht der beruflichen Vorsorge, § 4 Para. 30) advocate a restrictive interpretation, Cardinaux (BSK BV, Art. 113 Para. 45) pleads for greater legislative discretion. Federal Supreme Court jurisprudence tends toward the more extensive interpretation.
Para. 19Obligation for self-employed persons: The question of which groups of self-employed persons should have an obligation introduced is controversially discussed. Stauffer (Berufliche Vorsorge, Para. 158) supports an obligation for pseudo-self-employed persons, while Helbling (Personalvorsorge und BVG, p. 112) warns against overregulation.
Para. 20Relationship to the first pillar: The coordination principle between the first and second pillars is disputed. Schneider (in: Schneider/Geiser/Gächter, BVG Handkommentar, Intro Para. 23) advocates close coordination, while Brühwiler (Obligatorische berufliche Vorsorge, p. 45) pleads for more flexibility. The Federal Supreme Court has not taken a conclusive position.
Para. 21 When establishing or restructuring pension institutions, the constitutional minimum requirements under para. 4 must be observed from the beginning. Compliance with joint financing under para. 3 must be secured through regulations.
Para. 22 For the design of pension plans, the benefit objective under para. 2 lit. a should be used as a guideline. When determining benefits in the extra-obligatory area, attention should be paid to balanced coordination with the first pillar to avoid overinsurance (BGE 130 V 369).
Para. 23 Self-employed persons should actively examine the possibility of voluntary insurance under para. 2 lit. d. The tax advantages and pension protection usually outweigh the higher contribution costs compared to private provision (pillar 3a).
Para. 24 In cross-border situations, it should be noted that Art. 113 FC is primarily oriented toward Swiss pension institutions. The crediting of foreign pension benefits follows the rules of international social insurance law (BGE 150 II 202 E. 4).
#Constitutional Foundations and Three-Pillar System
BGE 130 I 205 E. 6 (30 June 2004)
The Federal Supreme Court confirmed the constitutional anchoring of the three-pillar system since 1972.
Fundamental decision on the tax treatment of the three pillars and their intercantonal delimitation.
«Swiss old age, survivors' and disability insurance is based on the so-called three-pillar concept, which has been anchored in the Federal Constitution since 1972 (Art. 34 quater oConst, Art. 111 ff. Const.). [...] Occupational pension provision as the second pillar, together with the first, shall enable the continuation of the accustomed standard of living in an appropriate manner (Art. 113 para. 2 lit. a Const.).»
BGE 135 I 28 E. 5 (12 December 2008)
The Federal Supreme Court delimited federal competences for regulating occupational pension provision vis-à-vis cantonal provisions.
Central for determining the limits of federal legislation under Art. 113 para. 1 Const.
«Municipalities are empowered to establish their own pension institution for the implementation of occupational pension provision for their personnel or to join a registered pension institution for this purpose, for example that of the relevant canton. A cantonal legal provision which prescribes the affiliation of a municipality with all or possibly part of its personnel - in this case teachers at municipal schools - to a specific pension institution, is contrary to federal law.»
BGE 134 V 170 E. 3.1 (12 March 2008)
The Federal Supreme Court concretised the constitutional mandate regarding voluntary insurance under Art. 113 para. 2 lit. d Const.
Guiding for the interpretation of constitutional principles on self-employed pension provision.
«Self-employed persons are not subject by law to the mandatory occupational pension scheme. However, they should have the possibility of voluntary participation (Art. 113 para. 2 lit. d of the Federal Constitution of 18 April 1999 [Const.; SR 101]). This constitutional mandate is implemented as a principle in Art. 4 of the Federal Act of 25 June 1982 on Occupational Old Age, Survivors' and Invalidity Insurance.»
BGE 148 V 114 E. 7.2-7.4 (24 November 2021)
The Federal Supreme Court determined the relationship between pension protection under Art. 113 Const. and social assistance reimbursement.
Significant for the constitutional protective content of occupational pension provision against state interventions.
«The vested benefits drawn under Art. 16 para. 1 FZO can be used for the reimbursement of financial social assistance. [...] Pension protection is taken into account through limited attachment within the framework of Art. 93 DEBA during enforcement proceedings - and not within the framework of decision proceedings at the administrative or trial court level.»
BGE 130 V 369 E. 2.1-2.2 (24 June 2004)
The Federal Supreme Court differentiated between mandatory and extended occupational pension provision in light of Art. 113 Const.
Leading for the delimitation of constitutional requirements between minimum pension provision and supra-mandatory benefits.
«For the mandatory area of occupational pension provision, Art. 26 para. 3 sentence 1 BVG provides that the entitlement to invalidity benefits expires upon the death of the beneficiary or with the cessation of invalidity. [...] In the extended area of occupational pension provision, pension institutions are free to determine that the entitlement to an invalidity pension only exists until reaching retirement age.»
BGE 142 II 369 E. 4 (18 July 2016)
The Federal Supreme Court clarified the scope of federal minimum requirements under Art. 113 para. 4 Const.
Relevant for determining public law elements in pension institutions.
«Subjection to procurement law does not arise merely from the Interstate Treaty on Public Procurement [...]. Rather, it must be examined whether the Aargau Pension Fund is subject to cantonal procurement law when awarding maintenance work on properties in its investment assets.»
#Constitutional Principles of Contribution Financing
BGE 135 V 13 E. 3 (21 November 2008)
The Federal Supreme Court specified the application of Art. 113 para. 3 Const. to advance withdrawal situations.
Important for understanding constitutional financing principles.
«Upon occurrence of the insured event of invalidity, the reimbursement of an advance withdrawal for home ownership promotion is generally owed, although a proportionate reduction of invalidity benefits is permissible.»
#Relationship to International Pension Arrangements
BGE 150 II 202 E. 4 (19 December 2023)
The Federal Supreme Court classified foreign pension benefits within the Swiss three-pillar system.
Current for the application of Art. 113 Const. to cross-border pension relationships.
«Tax classification of pensions (contributions as well as payouts) from a foreign pension scheme into the system of Art. 22 para. 1 DITA. [...] The federal law provisions enacted under Art. 113 Const. are generally oriented towards Swiss pension institutions.»